1. Financial and economic stress has refocused attention on gold: Central bankers have rated gold’s performance in crises, diversification benefits, and lack of default risk as significantly more relevant this year than last year, meaning that continued financial uncertainty is drawing their attention to gold.
2. Negative interest rates loom in central bankers’ minds: 88% of central banks say negative interest rates impact their investment choices, a situation which may be exacerbated as monetary policy globally is eased further. This in turn may be positive for gold as the yield on government bonds, the mainstay of central bank investment, continues to fall.
3. Significant divergences between advanced and developing countries’ attitudes: Developing market central banks view gold differently than their advanced economy counterparts. They consistently rate gold’s investment-related characteristics, like capital preservation and the lack of risk, as more relevant than advanced economy central banks. This points to developing market countries seeing gold as an active part of their portfolios and not a legacy asset, a potential reason for why these countries have been the engine of central bank gold purchases in the last decade.
4. Central banks think gold’s role will grow bigger in the future: 75% of respondents think that central banks overall will be holding more gold this year, up from 54% in last year’s survey. As superpower rivalries heat up, currencies may become extensions of geopolitical ambitions, which may be causing more central banks to think about neutral alternatives like gold.
5. One in five central banks expects to buy gold this year: 20% of respondents say that they plan to increase their own gold reserves this year, up from 8% in last year’s survey. This points to a continuation of an ongoing trend wherein the number and diversity of central bank gold buyers has increased. Although the total stock of central bank buying this year may not reach the record levels seen in recent years, the level of interest continues to be high, helping to extend a decade-long period of central bank gold accumulation.
6. Small upticks in domestic gold storage: 5% of respondents say they have increased domestic gold storage in the past year, up from 0% in last year’s survey. Similarly, 7% say they will increase domestic storage in the coming year, also up from 0% last year. This points to continuing interest in gold repatriation, albeit on a small scale.
7. The highest survey response level to date: We received 51 responses to this year’s survey, up from 39 responses in 2019 and 22 responses in 2018. This growth came despite the survey overlapping with the Covid-19 outbreak and demonstrates the enduring interest in gold by central banks.